July 20, 2020 / 2:22 PM / 15 days ago

FOREX-Euro dips from 4-month high vs dollar, but outlook well-supported

    * EU leaders go into fourth day of EU negotiations
    * Frugal northern states seek less in grants from recovery fund
    * U.S. dollar index rises from 6-week low
    * Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E

 (Adds new comment, FX table, updates prices, changes byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, July 20 (Reuters) - The euro slipped against the dollar on Monday, as investors booked
profits on earlier gains that took it to a more than four-month high on hopes the European Union would
agree on a recovery fund for economies in the region hit by the COVID-19 pandemic.
    The fund is expected to be around 750 billion euros ($857.93 billion), of which 390 billion euros
could be offered as grants.
    EU leaders have made progress in Brussels after three days of talks, but they remain at odds over the
composition of the recovery fund. The fund's backers initially proposed 500 billion euros of grants and
250 billion of loans.
    Some countries objected to that much in grants. They saw 350 billion euros as the maximum, but showed
signs of compromising.
    "We can see some profit-taking in the euro," said Shaun Osborne, chief FX strategist at Scotiabank in
Toronto. "But I can still see it as well-supported on weakness as this deal is good for the European
    The euro hit a high of $1.1467 and was last down 0.1% at $1.1412.
    Analysts said the smaller the amount of grants, the more the euro would fall.
    The EU summit was originally due to last two days. The fact that it is now continuing into a fourth
day of negotiations is evidence that EU leaders are ready to do everything it takes to maintain unity in
the euro zone, said Jane Foley, senior currency strategist at Rabobank in London
    If they agree on a recovery fund, that would boost confidence in the euro regardless of the numbers in
the deal, said Mike Bell, global market strategist at J.P. Morgan Asset Management.
    Elsewhere, the U.S. dollar index rose 0.1% to 96.002, recovering from a six-week low hit
earlier in the session. Its gains, though, remain capped by expectations of more stimulus from Europe and
from the United States.
    That said, the U.S. Congress is bracing for a battle on the proposed stimulus bill, that could further
boost safe-haven bids for the dollar.
    U.S. Senate Democrats are prepared to block Republicans from moving forward on a partisan coronavirus
aid bill, the chamber's top Democrat warned on Monday, as Republican leaders were expected to meet at the
White House to discuss legislation.
    The dollar rose 0.1% versus the yen to 107.14, and was up 0.1% as well against the Swiss
franc to 0.9393 franc.
    Currency bid prices at 10:11AM (1411 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1415        $1.1426     -0.10%         +1.83%      +1.1467     +1.1403
 Dollar/Yen       JPY=        107.1400       106.9900    +0.14%         -1.58%      +107.5200   +107.0200
 Euro/Yen         EURJPY=     122.31         122.30      +0.01%         +0.30%      +122.9700   +122.1900
 Dollar/Swiss     CHF=        0.9393         0.9384      +0.10%         -2.94%      +0.9410     +0.9374
 Sterling/Dollar  GBP=        1.2629         1.2565      +0.51%         -4.75%      +1.2645     +1.2519
 Dollar/Canadian  CAD=        1.3550         1.3576      -0.19%         +4.34%      +1.3600     +1.3550
 Australian/Doll  AUD=        0.7001         0.6995      +0.09%         -0.28%      +0.7005     +0.6974
 Euro/Swiss       EURCHF=     1.0723         1.0723      +0.00%         -1.19%      +1.0776     +1.0721
 Euro/Sterling    EURGBP=     0.9037         0.9088      -0.56%         +6.90%      +0.9138     +0.9032
 NZ               NZD=        0.6559         0.6556      +0.05%         -2.63%      +0.6569     +0.6540
 Dollar/Norway    NOK=        9.2803         9.2928      -0.13%         +5.72%      +9.3228     +9.2467
 Euro/Norway      EURNOK=     10.5940        10.6240     -0.28%         +7.69%      +10.6353    +10.5848
 Dollar/Sweden    SEK=        9.0098         9.0334      -0.41%         -3.61%      +9.0640     +8.9870
 Euro/Sweden      EURSEK=     10.2864        10.3285     -0.41%         -1.75%      +10.3395    +10.2871
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Olga Cotaga in London; editing by
Jonathan Oatis)
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